The bank’s private wealth department assists customers in managing the ‘significant intricacy’ present in the globe’s second-biggest art market.

Goldman Sachs has started offering guidance on art and collectibles to ultrarich individuals in Asia, encompassing both Hong Kong and mainland China—a region that constitutes the globe’s second largest art marketplace.

In 2019, the PWM unit of a major U.S. investment bank initiated its art and collectibles advisory services in the United States. This offering was extended to Europe about three years ago and introduced in Asia last year. Globally, this division caters to roughly 16,000 clients, each entrusting an average asset value of $70 million to the bank. Individuals classified as ultra-high-net-worth have a minimum net worth exceeding $30 million.

Monica Heslington, who leads art advisory at Goldman’s PWM division, shared with the Post during an exclusive talk in Hong Kong that they assist numerous clients dealing in passionate and luxurious items. She emphasized their aim to guide these clients toward more strategic thinking regarding markets for such goods, particularly noting how these sectors can often lack transparency.

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Art and collectibles involve greater intricacy, requiring individuals to seek out the appropriate experts to guide them through the procedure.

Although clients in both Asia and the Western world share a strong enthusiasm for art, the supporting structures within these markets vary significantly between the two regions, as stated by Heslington.

Many Americans depend on art advisors for tasks such as negotiation, research, and educational guidance, and they often employ specialized legal experts to scrutinize their contracts, she mentioned.

Heslington noted that in Europe and Asia, there is reduced dependence on such infrastructure. Many collectors rely on their individual assessment skills, and local customs frequently emphasize personal connections rather than official advisory positions.

Consequently, the bank views this as a “major chance for novice collectors to acquire knowledge of optimal procedures as they embark on their collecting path, with special emphasis on the significance of engaging an independent advisor during deals to guarantee thorough understanding,” she stated.

The previous year saw auction revenues for fine art in China amounting to $1.9 billion, placing them just below the United States at $4.3 billion but above the UK’s total of $1.4 billion, as reported by the online platform Artnet specializing in the art market.

“In Goldman’s perspective, there’s absolutely no reason not to be present here and provide these services to our clients,” Heslington stated.

The Goldman unit specializes in assisting the ultrarich with navigating financial markets, covering everything from mergers and acquisitions to asset disposal and the management of artwork and collectibles.

Heslington stated, “Our role involves identifying their motivations and objectives, strategies for sales, paperwork, insurance, shipping logistics, and more. We lay a strong foundation to assist them in saving valuable time.”

Goldman assists clients with matters of taxation, philanthropy, as well as succession and legacy planning concerning their artwork. The recommendations can vary depending on differing family circumstances and local tax regulations across jurisdictions, as stated by Heslington.

For instance, high inheritance taxes in the United States prompt numerous individuals to sell their artwork instead of bequeathing it to their offspring. Similarly, even in Hong Kong, which does not impose an estate tax, collectors grapple with choices regarding whether to hand over their art collections to their children, as mentioned.

Heslington stated that their art expertise enables collaboration with clients’ legal representatives and financial advisors to tackle the intricacies and crucial queries associated with art.

Goldman Sachs’ art advisory division also plays a role in the bank’s loans backed by artworks. They verify that the pieces being used as collateral have resale value in the secondary market, allowing the bank to potentially liquidate them should there be a default.

Furthermore, the art advisory service organizes exclusive events for clients or their offspring, providing various personalized experiences that span aiding novice purchasers to guiding them on managing their collections.

Heslington advised against including artworks in investment portfolios exclusively for the purpose of attaining specific financial returns.

“At Goldman, we do not suggest art or collectibles as part of your portfolio,” she stated, highlighting their lower liquidity relative to other types of investments. “My advice is for individuals to view art as more than just a financial instrument; it’s also an investment in human experience, civilization, and cultural heritage.”

Although it’s prudent to conduct thorough research before buying art, the real worth comes from ‘non-investable returns,’ such as its cultural importance and the personal satisfaction it provides.

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The article initially appeared on the South ChinaMorning Post (www.scmp.com), which is the premier source for news coverage of China and Asia.

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